The other week, we discussed the need to move members from satisfied to loyal. To best achieve this in your credit union, it helps to have a better understanding of what separated satisfaction from loyalty.
Satisfaction means you met a very low bar of expectation. When I enter a credit union, I expect to have access to my money, make a payment on a loan or get answers to my questions.
Loyalty, however, means that I am an advocate for my credit union. I proudly tell others about the service I receive. I will go out of my way to use their services, even if another financial institution offers comparable terms.
William Bluel, a professor of Decision Sciences at Pepperdine University, explains the difference between satisfaction and loyalty at his blog this way:
Experience tells me, as do the definitions in several dictionaries, that satisfaction relates to the result of a process. The process may be a sales process, product performance process, or a service process. Loyalty relates to a relationship. Customer loyalty does not occur, but customer satisfaction can occur immediately following a successful process. Loyalty can, in fact, survive a negative process. Loyal customers will continue to purchase from a company even though they may have had a bad experience.
Even more surprising is the fact that satisfied customers will leave your credit union. Bluel also shares this:
Frederick Reichheld noted several years ago that between 65 and 85 percent of customers who defect said they were satisfied to very satisfied with their former supplier. As an example, Reichheld used the auto industry to make his point by showing that satisfaction scores are between 85 and 95 percent, while repurchase rates average only 40 percent.
What makes some customers loyal and some merely satisfied? The key is in building a relationship. Every financial institution – bank, credit union or non-bank lender – offers a variation of the same set of services. Some provide a way to store money and access that money with checks, debit cards and ATMs. Others lend money at various rates and repayment terms.
While some people will solely make their decision based on the final cost, the interest rate or the fee structure, most people involve other “intangible” factors. How am I treated when I have a problem? Does the credit union have my interests at heart?
Building loyalty is a three-step process. First, a credit union has to have a product someone needs – a loan package, a passbook account or a savings account. Next, that person must be able to conduct the transaction in a way that meets their needs and expectations. The final step is building loyalty. Loyalty requires building a relationship with the member.
Call centers and member service departments play a crucial role in the development of the final two steps. A member’s primary contact method with a credit union is by phone. Having a well-trained call center prepared to exceed member expectations is one of the easiest ways to build loyalty among your members.
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